Hello everyone,
I have been a silent reader here for a while. I originally wanted to ask these questions in a thread where people post quick questions and different users respond – as I’ve often seen in other forums – but unfortunately, I couldn’t find one. So, I finally decided to start my own thread.
A brief introduction about us.
I am 25 years old and have been with my company for 6 years (including my training period). I work for the city and am basically a civil servant. That means I always get some paperwork for insurance discounts and other typical benefits. It’s not an official civil servant status, but close enough in terms of job security.
My girlfriend is 22, has been working for a small to medium-sized enterprise for one year, and is doing an evening degree at the same time.
We have been a couple for nearly 6 years, and naturally, buying a house within the next few years is not off the table. We definitely do not plan to have children in the near future.
I am still a complete beginner in this field and would simply like to hear some opinions regarding our plans.
First, I have to say that our spending habits are far from ideal...
I have a net income of at least 2500€ per month (tax class 1). In addition, I receive Sunday work pay, overtime payments, on-call pay (about 200€ per month), a company car (only for commuting to and from work), and a total of 14 monthly salaries per year.
However, I only consider these extras as a buffer and do not include them in our budgeting calculations.
She has a fixed net income of 1700€ (tax class 1), which will increase at the end of the year if she completes her degree successfully.
So, we have a minimum of 4200€ available. As it stands now, aside from saving 250€ per month, everything else is basically spent. Our expenses break down as follows:
Rent: 1000€
Electricity: 80€
Internet: 50€
Car (including insurance and tax): 450€
Insurance, mobile contracts, etc.: 150€
Loan repayment (which will end in 2 months): 250€
Public transportation ticket: 100€
Savings: 250€
Since we don’t keep a detailed household budget yet, I can’t give exact figures for groceries, clothing, etc. We just buy what we need at the moment. With 1900€/month (plus my additional allowances/salaries), our annual holidays are also paid for. The car is unfortunately one of the worst financial decisions I have made, as it is hardly used except on weekends. This will be minimized when we buy a house, but I’ll leave it as it is for now.
As you can see, the 1000€ rent is a major burden and that’s exactly what bothers us most.
Currently, we are looking at properties in the area, and decent houses/semi-detached houses are around 350,000 to 450,000€ range.
No one can say where prices will be in the next few years, but this is the current situation. I have looked even less into building a house than buying one, in case anyone wants to suggest that option.
Is buying a house generally more expensive than building one?
How much mortgage payment would you recommend with this income?
I understand it probably varies a lot, but can you give a rough idea of additional monthly costs, like waste collection, home insurance, etc.? Is there a place where I can look this up for my location?
How much do you put aside monthly for home renovations?
The last two questions are the most important to me, because our spending habits are a factor – one person can do 1000€, but another only 800€.
We have not been to a bank yet. However, I once had an appointment at my house bank for the car financing, and I was “offered” roughly 750,000€ (with 60,000€ equity) for a house on the side. Since then I don’t take that bank seriously and would rather ask here first. We do have equity, but I can’t give exact amounts because there are five different contracts with varying details – hence my question about the mortgage payment.
That turned out to be quite a long text for just a few questions, but every journey starts with a first step...
Best regards and good night,
Dani
I have been a silent reader here for a while. I originally wanted to ask these questions in a thread where people post quick questions and different users respond – as I’ve often seen in other forums – but unfortunately, I couldn’t find one. So, I finally decided to start my own thread.
A brief introduction about us.
I am 25 years old and have been with my company for 6 years (including my training period). I work for the city and am basically a civil servant. That means I always get some paperwork for insurance discounts and other typical benefits. It’s not an official civil servant status, but close enough in terms of job security.
My girlfriend is 22, has been working for a small to medium-sized enterprise for one year, and is doing an evening degree at the same time.
We have been a couple for nearly 6 years, and naturally, buying a house within the next few years is not off the table. We definitely do not plan to have children in the near future.
I am still a complete beginner in this field and would simply like to hear some opinions regarding our plans.
First, I have to say that our spending habits are far from ideal...
I have a net income of at least 2500€ per month (tax class 1). In addition, I receive Sunday work pay, overtime payments, on-call pay (about 200€ per month), a company car (only for commuting to and from work), and a total of 14 monthly salaries per year.
However, I only consider these extras as a buffer and do not include them in our budgeting calculations.
She has a fixed net income of 1700€ (tax class 1), which will increase at the end of the year if she completes her degree successfully.
So, we have a minimum of 4200€ available. As it stands now, aside from saving 250€ per month, everything else is basically spent. Our expenses break down as follows:
Rent: 1000€
Electricity: 80€
Internet: 50€
Car (including insurance and tax): 450€
Insurance, mobile contracts, etc.: 150€
Loan repayment (which will end in 2 months): 250€
Public transportation ticket: 100€
Savings: 250€
Since we don’t keep a detailed household budget yet, I can’t give exact figures for groceries, clothing, etc. We just buy what we need at the moment. With 1900€/month (plus my additional allowances/salaries), our annual holidays are also paid for. The car is unfortunately one of the worst financial decisions I have made, as it is hardly used except on weekends. This will be minimized when we buy a house, but I’ll leave it as it is for now.
As you can see, the 1000€ rent is a major burden and that’s exactly what bothers us most.
Currently, we are looking at properties in the area, and decent houses/semi-detached houses are around 350,000 to 450,000€ range.
No one can say where prices will be in the next few years, but this is the current situation. I have looked even less into building a house than buying one, in case anyone wants to suggest that option.
Is buying a house generally more expensive than building one?
How much mortgage payment would you recommend with this income?
I understand it probably varies a lot, but can you give a rough idea of additional monthly costs, like waste collection, home insurance, etc.? Is there a place where I can look this up for my location?
How much do you put aside monthly for home renovations?
The last two questions are the most important to me, because our spending habits are a factor – one person can do 1000€, but another only 800€.
We have not been to a bank yet. However, I once had an appointment at my house bank for the car financing, and I was “offered” roughly 750,000€ (with 60,000€ equity) for a house on the side. Since then I don’t take that bank seriously and would rather ask here first. We do have equity, but I can’t give exact amounts because there are five different contracts with varying details – hence my question about the mortgage payment.
That turned out to be quite a long text for just a few questions, but every journey starts with a first step...
Best regards and good night,
Dani
M
Marvinius2 Jun 2017 06:45No more than 30% of net income should go towards loan repayments, and the loan should be fully paid off by the early 50s. This means a minimum repayment rate of 3%, preferably 5%. A monthly payment of 1300 euros results in a loan of 350,000 euros at 1.5% interest and 3% repayment rate, which amounts to 410,000 euros including equity.
But first, you should practice your consumer habits a bit. You said it yourself.
Buying is always a tricky matter. Overall, I think buying is more expensive than building. However, it’s relative. Usually, you have to compromise on the layout and such.
If you buy a fully renovated house, you pay for that as well. Otherwise, you buy a property where a lot still needs to be done. Real bargains are rare in our market.
What you pay for when buying used is mainly the location. Often also the shape of the plot.
Personally, I don’t know much about building. But I see it with my best friend, who is currently building. It’s stressful and he’s on the construction site every day until late in the evening.
What do you mean by “civil servant” in your case? A civil servant on probation, temporary contract? Or are you employed under the public service pay scale?
I set aside 300€ (about $320) per month as a maintenance reserve. Almost anything that breaks in a house is expensive!
Running costs vary individually. You should already have waste disposal costs now, right?
My advice to you would be to adjust your consumer behavior toward the goal of a house. Save up a significant amount of equity over three more years, and then start concrete planning in a relaxed way.
Before that, you can gather information, seek opinions, watch the market, or buy a plot if one becomes available that really suits you. You’re both still quite young. But I completely understand your thoughts. I also bought at 24 and renovated/rehabilitated everything myself. But that was an extreme effort.
If you have questions: just ask!
Buying is always a tricky matter. Overall, I think buying is more expensive than building. However, it’s relative. Usually, you have to compromise on the layout and such.
If you buy a fully renovated house, you pay for that as well. Otherwise, you buy a property where a lot still needs to be done. Real bargains are rare in our market.
What you pay for when buying used is mainly the location. Often also the shape of the plot.
Personally, I don’t know much about building. But I see it with my best friend, who is currently building. It’s stressful and he’s on the construction site every day until late in the evening.
What do you mean by “civil servant” in your case? A civil servant on probation, temporary contract? Or are you employed under the public service pay scale?
I set aside 300€ (about $320) per month as a maintenance reserve. Almost anything that breaks in a house is expensive!
Running costs vary individually. You should already have waste disposal costs now, right?
My advice to you would be to adjust your consumer behavior toward the goal of a house. Save up a significant amount of equity over three more years, and then start concrete planning in a relaxed way.
Before that, you can gather information, seek opinions, watch the market, or buy a plot if one becomes available that really suits you. You’re both still quite young. But I completely understand your thoughts. I also bought at 24 and renovated/rehabilitated everything myself. But that was an extreme effort.
If you have questions: just ask!
Even if you’re not currently planning to have children, they will probably come within the next 10 years. So you should still consider whether you can manage a monthly payment of about €1500 (approximately $1600) using parental allowance. You also need to discuss whether one of you wants to work part-time or even stay home full-time (though it would be a shame for her to quit her studies).
Otherwise, I would always recommend building a new house if you have very specific ideas about the layout. If you’re more flexible, buying a used property could also work well. In general, I would say that a new build is cheaper over the years. Renovations just tend to come much later. Relatives bought a used home and are now renovating. Their costs are gradually catching up with ours (we have built or are in the process), and they are still far from finished.
For now, you should first take stock of your equity. Then visit banks for an initial round of consultations to get a rough idea. After that, you can start looking for properties.
Otherwise, I would always recommend building a new house if you have very specific ideas about the layout. If you’re more flexible, buying a used property could also work well. In general, I would say that a new build is cheaper over the years. Renovations just tend to come much later. Relatives bought a used home and are now renovating. Their costs are gradually catching up with ours (we have built or are in the process), and they are still far from finished.
For now, you should first take stock of your equity. Then visit banks for an initial round of consultations to get a rough idea. After that, you can start looking for properties.
What kind of apartment can you get for a total monthly rent of 1000? Is it a small, cramped space or rather a nice apartment with enough room and a good location?
Because living expensive or cheap doesn’t just depend on the rent you pay.
In the end, paying rent means that while you’re not building equity for yourself, you do get carefree living without responsibilities.
For a newly built single-family house, operating costs are estimated at about 2.5€ per month, and for an older house, you should also set aside monthly repair costs.
How often do you go out? Are you very active socially or more of a homebody?
Are you interested in having a garden and taking on its maintenance responsibilities?
Best regards in brief
Because living expensive or cheap doesn’t just depend on the rent you pay.
In the end, paying rent means that while you’re not building equity for yourself, you do get carefree living without responsibilities.
For a newly built single-family house, operating costs are estimated at about 2.5€ per month, and for an older house, you should also set aside monthly repair costs.
How often do you go out? Are you very active socially or more of a homebody?
Are you interested in having a garden and taking on its maintenance responsibilities?
Best regards in brief
S
Steffen802 Jun 2017 08:44With a net income over 4000 EUR, without children and a desire to own a house, a savings rate of 250 EUR is definitely far too low. High rent or not (maybe you could also move to a more affordable apartment for a while)… I would try to save 1000-1500 EUR. That should actually be possible. If you maintain that for a few years, it will also be good practice, and after moving into the house, you suddenly have “1000 EUR” more per month. That’s the situation we are in now as well… for a few months we have fully drawn the loan and can start repaying; we basically don’t have to save anymore. It’s surprising how much money suddenly accumulates in the account. During our “saving phase” (more than 10 years), we always transferred money automatically out of sight via standing order.
Best regards, Steffen
Best regards, Steffen